National Debt

The Moral Case

The U.S. may be the world’s most prosperous nation, but its decades-long spending binge threatens its ability to make good on its debts. If we do not make tough decisions, we will be faced with three unacceptable solutions: raise taxes on future generations, inflate our currency to reduce the value of our debt or refuse to repay those who have lent us money in good faith. All of these solutions are immoral and unfair because they harm those who have done us no harm.

All good parents teach their children to be responsible — to keep their promises, to live within their means and to repay their debts. We should pass onto our children a country that lives by the same principles we keep at home. The time to get serious is now; we must examine our choices and cut where we can, or else we will leave our children a land of debt and despair rather than one of opportunity and hope.

The Principles

Any acceptable solution to the national debt problem will keep three principles in mind.

The debt problem is caused almost completely by out-of-control entitlement spending. Thus, entitlement reform is necessary to put the U.S. on a stable path.

Debt reduction is most successful when it is achieved through spending cuts, not through tax increases. Everyone understands that someone in financial trouble should stop spending, not ask for a raise.

Any real solution will be long-term. The nation’s financial situation is dire, and any plan that vows to solve the situation in a few years isn’t realistic.

The Policies

The evidence from countries that have faced debt crises in the past is clear: countries who have returned to fiscal health have made spending cuts 85 percent of their deficit reduction plan, on average.

Entitlement spending should be the major focus of spending cuts, and the steps forward for entitlement reform are outlined in the Entitlement Reform section. But many programs are ripe for trimming, from agriculture subsidies to fuel subsidies. The president’s own Fiscal Commission identified almost $2 trillion in cuts that could take place between 2012 and 2020, but the recommendations were ignored. Reducing the government workforce by 10 percent through attrition would save taxpayers $13.2 billion by 2015.

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The Facts

U.S. debt is 100% of annual GDP, which most economists characterize as an unsustainable level.

In 2011, the U.S. borrowed about $4,152 for every person in America, totaling $1.3 trillion.

Servicing the national debt will cost $1 trillion per year by 2023 under current policy.

Closing the spending gap through increased revenues over 25 years would require a 56% tax hike.

“For far too long, short-sighted politicians have paid for today’s promises with tomorrow’s prosperity. If Congress doesn’t take serious action to reign in federal spending, our generation will be heirs to a legacy of higher taxes, more debt, and fewer opportunities.”